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Sunday, May 11, 2008

Guidelines to enhance Islamic venture capital

KUALA LUMPUR: The Securities Commission (SC) yesterday announced new guidelines and best practices aimed at helping the country's Islamic venture capital industry meet the international benchmark.

Managing director Datuk Nik Ramlah Nik Mahmood expects the new guidelines to enhance local and foreign fund interest in investing in syariah-compliant businesses.

“I am sure the local Islamic venture capital industry will grow and take off especially with the support we have,” she told reporters after delivering a keynote address at the Islamic Venture Capital and Private Equity Conference 2008 yesterday.

The two core components under the new guidelines are the requirement to appoint syariah advisers and the core business must be syariah-compliant.

As at end-2007, there were 98 venture capital corporations (VCC) and venture capital management corporations (VCMC) registered under the SC with total funds worth RM3.3bil.

Ramlah said the country's venture capital (VC) and private equity (PE) was driven by demand for equity funding from emerging and expanding businesses.

She noted that the Government had allocated about RM1.6bil for the industry under the Ninth Malaysia Plan.

n addition, the Capital Market Masterplan also introduced specific initiatives and tax incentives to encourage more foreign participation in VCCs and VCMCs.

Meanwhile, Malaysian Venture Capital and Private Equity Association chairman Azam Azman said the VC and PE markets in Malaysia and South-East Asia were still growing based on the influx of investments flowing into Asia from the Middle East recently.

He said the funds committed to VC and PE asset classes both in Malaysia and globally had grown significantly over the past 10 years.

From 2005 to 2007, the total number of VCCs and VCMCs in Malaysia grew by 13%. Azam noted that total VC investments rose to RM1.78bil in 2007 from RM1.59bil in 2006.

There was also a 183% rise in the amount invested in investee companies from RM169mil in 2006 to RM479mil in 2007.

He added that investment in investee companies which traditionally focused on the information and communications technology sector were shifting to other areas such as life sciences, electricity and power generation, education, trading, transportation and finance.

ii) Monthly or regular investment

iii) Withdrawal from EPF (KWSP) - account 1

Maximum: (n/a)

Withdrawal/Redemption: at any time (5 days notice)

Who can invest?

i) Individuals or corporations

ii) Residents or non-residents of Malaysia

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FOREIGN INVESTORS CAN ACCESS TO UNIT TRUSTS IN MALAYSIA

"There are no restrictions for foreign investors to access Islamic securities, bonds and unit trusts in Malaysia. Non-residents are free to invest in Malaysia in any of these products. There are also no restrictions on the repatriation of capital, profits and income earned from Malaysia."[Securities Commission Malaysia]